Hello Alfred Entrepreneurship Scenario
Marcela Sapone and Jessica Beck were friends and fellow messy apartment renters while they were at the Harvard Business School. They decided to hire someone to come in once a week to clean and restock groceries for each of their apartments, so that they could focus on their studies. They hired someone from Craigslist and had the idea about how this could all be done better and more sustainably. They were frustrated by the difficulty of finding someone on the very plain Craigslist website and they knew that there were no assurances about the quality.
The two women built on this experience to found Hello Alfred (www.helloalfred.com). The new firm was different than Craigslist, since it was not based on a shared economy model (peer-topeer transactions with little or no oversight). In their model the firm hires all of the “Alfred’s” (as they call them) as employees of the firm paying them $16/hour with benefits to help people with their lives. They crafted together a careful plan to make every trip made for a client profitable, and to grow only as fast as they could develop the people to provide the kind of service the firm promised. Hello Alfred provides personal services to allow customers to live the life they want. Cleaning your place, buying groceries, picking up packages, or picking up cleaning, the goal is to free the client from simple chores.
Following the principles of a lean startup, they decided to systematically test their business idea while they were still students in Boston. For six months, they tested prices and services with customers. They systematically offered customers different levels of services in order to determine the best offerings. They tested out different web page designs and took surveys of potential customers. They also poured through entries on Craigslist looking for common requests. They finally launched the official business after validating and nullifying findings.
The average Alfred customer spends $415 per month with Hello Alfred, and the company has grown to 26 corporate employees in its New York headquarters. The company has been a magnet for Venture Capital funding, having raised over $12 million. The business has been growing 30 percent month over month for some time, with the founders really holding the business back to ensure that each element of it is financially sustainable. Since they hire and train each employee, the process takes longer yet they believe it ensures that the business strategy will be implemented consistently.Questions
1. Visit Hello Alfred’s website helloalfred.com and study it, then draw its Business Model, following the Barringer-Ireland’s Template. State and explain the value which the business offers to its users. Which activity in the value chain does it improve, and how?
2. Identify 2 ethical and 2 legal issues which might be associated with Hello Alfred? What permits and licenses would an entrepreneur need to obtain in order to open a similar business in Saudi Arabia?
3. What made Hello Alfred attractive to Venture Capital Funding? Under which conditions does this type of financiers work? What characterizes their profile? How is the fund structured?
4. What competition would Hello Alfred face, should it enter the Saudi Arabian market? What barriers to entry would it face, and how would it overcome them? Draw a competitive analysis grid to analyze its current and future competition in the Saudi Arabian market.